In a blog post released on August 10th, Google CEO, Larry Page announced the creation of a new parent company called Alphabet. While the news came as a shock for many, Page felt that it was a long time coming. He says, “From the start, we’ve always strived to do more, and to do important and meaningful things with the resources we have…our company is operating well today, but we think we can make it cleaner and more accountable.”
Alphabet is thought to be the solution to do just that.
Alphabet will be a collection of companies, with Google being the largest. With this new switch up, Google will be able to focus on search and advertising entities while Alphabet will represent other Google ventures such as Google’s health efforts: Life Sciences that is working on the development of glucose-sensing contact lenses and Calico, which is Google’s independent research and development biotech company built for longevity.
The separation will allow for Page and Google co-founder, Sergey Brin to manage their other ventures as independent companies, leaving Google to be run by Sundar Pichai, who was recently named CEO. New Google CFO, Ruth Porat will control the financials for both Alphabet and Google.
Google’s current directors will remain in their positions while each company under the parent firm will have its own CEO.
Sergey Brin will become president of Alphabet and Eric Schmidt will be executive chairman.
Alphabet Inc. will replace Google Inc. as the publicly-traded entity and all shares of Google will automatically convert into the name number of shares of Alphabet, with all of the same rights.
“This new structure will allow us to keep tremendous focus on the extraordinary opportunities we have inside of Google,” Larry Page said in a blog post.
How much effect will the invention of Alphabet have on Google’s businesses? It’s too early to say and it’s possible that the bottom line will be subtle. But as a business owner, you can expect to see more emphasis placed on Google’s side projects such as Google Fiber (Google’s gigabit connection provider), the self-driving car, and many others.
We will keep you informed of new developments as Alphabet makes its official launch later this year.